Cloud computing - head in the clouds

2nd of May 2012

Cloud computing is a product of blue-sky thinking on a global scale that is fast revolutionising the way we run our businesses. But while the benefits of this new way of providing IT services are far from nebulous, Hartley Milner warns they need to be weighed against the risks that come with any innovation in its infancy.

Most of us will have had our head in the clouds for many years without necessarily being aware of it. We use cloud computing when we go on social networking websites such as Facebook, MySpace and Twitter or use Google TV and music services or Apple iTunes.

Now the phenomenon is going mainstream as businesses of all sizes increasingly see the advantages of signing up to cloud services as a way of managing their data, hardware and software requirements online while saving both time and money.

And for providers of its services, the cloud has a lucrative silver lining – giving rise to a global industry predicted to be worth around 65 billion euros by 2016.

The benefits in terms of revenue are not lost either on the European Commission, which estimates this hot new trend in computing could be worth 35 billion euros to the region by 2014 and create 1.5 million jobs over the next five years.

Following an online consultation last year, commissioners are busy preparing a cloud computing strategy to create a flourishing digital economy within the next eight years.

Announcing the strategy, Neelie Kroes, commission vice-president for the digital agenda, said: "I am excited about the potential benefits of cloud computing to cut costs, improve services and open up new business opportunities. We need a well-defined cloud computing strategy to ensure that we make the best use of this potential. ”

EU strategy

The strategy, which will tackle data protection and liability issues and other legal and technical barriers, will be announced later this year.

In essence, the cloud is a vast brain where documents, emails, customer information, business applications and other assets are stored in a network of remote servers and accessed using a computer, laptop or smartphone with internet connection.

You can use a cloud service as a stand-alone solution or in addition to your existing IT infrastructure. Consumption is billed as a utility – like your energy provider – with minimal up-front costs.

There are three main cloud-computing services to consider:

Software as a Service (SaaS): This is the most common form of cloud computing used by small businesses. It involves the use of software hosted on the remote servers, allowing you to run applications through your web browser and save, retrieve or share files that are stored 'outside' your business.

These services include web-based email, office software, customer relationship management systems or tools that support collaborative working. SaaS provides greater flexibility, enabling you to scale your IT requirements quickly and easily to meet the changing needs of your business.

Broader benefits

Infrastructure as a Service (IaaS): IaaS allows you to use virtual hardware resources to build an IT infrastructure. It includes server space, data storage facilities or networking hardware. As with SaaS, you can modify or expand capacity as required. Other benefits include a reduction in your IT costs. By outsourcing your hardware requirements, you no longer need to buy hardware or have the internal expertise to maintain it.

Platform as a service (PaaS): Here you use online application developments to build and adapt applications to suit your business needs. The software development tools and hardware you need to do this – known as 'cloudware' – are all located remotely and accessed through the web.

Some of the broader benefits of cloud computing include:

•Lower IT costs – having your business applications provided over the internet means you no longer need to buy, install and set up software across your business yourself – you simply work off servers in the cloud. You can also reduce your hardware and software requirements and costs because the service provider manages any upgrades or maintenance. By outsourcing your IT needs, your business may no longer need the same levels of in-house technical expertise, allowing you to focus more on your core business.

•Scalability – your can scale your IT requirements up or down as and when required. Most service providers will allow you to upgrade your existing package to accommodate changes in your business needs or market conditions, avoiding expensive changes to your existing IT systems.

•Access to new technologies – you no longer need to worry about updating your software or investing in new back-end technology as your service provider could manage this on your behalf. This can also give you access to software, hardware and IT functions that would be too expensive to buy outright.

•Flexibility – employees can access files using web-enabled devices such as smartphones, laptops and netbooks from home or while on business trips. The ability to simultaneously share documents and other files over the internet can also help support both internal and external collaboration.

Easy to collaborate

•Data backup and storage – cloud services can provide your business with professionally managed backup and storage for all of your business information and data. This means you can get at your data from virtually anywhere as long as you have access to the cloud. Most online storage services also provide a means of sharing files with others, making it easier to collaborate on, or deliver, large files without clogging up the email system with massive file attachments.

•A greener solution – with no need for servers on your premises, you could see a significant reduction in your energy consumption. The downside is that cloud data centres are power-hungry and we are using more of them as demand grows. The hope is that a new generation of more efficient super computers will make cloud computing a truly green option.

However, anyone looking to place their business in the cloud needs to weigh the benefits against the downsides, which include:

•Service loss – some downtime may be required to update software, install new hardware or for general maintenance. Greater disruption can result from system failures or other problems, which are so far proving rare. Also, there is the risk of your provider going out of business.

•Regulatory and security issues – prime reasons why some businesses are holding back from placing their data in the cloud. Customers are ultimately responsible for the security and integrity of their own data and compliance to regulations governing the protection of data, even when held by a service provider. The ease of sharing sensitive or critical information online includes running the risks of being liable for exposing data that could be classified as controlled technical information.

•One-sided service agreements – giving users little redress in the event of a calamity and locking them in to using cloud applications and a spiral of rising service costs.

These and other issues are of concern to the European Commission, which is keen to promote cloud computing as a means to lever economic growth back into the region.

Lack of resources

“Many still hesitate before the cloud,” said the commission’s Neelie Kroes. “They worry: how do I know what service I am buying? Will my data be protected? Which providers can I trust? If I don't like what I am getting, can I switch providers easily? Or, if I really don't like what I'm getting, can I easily enforce the contract through legal action?

“All these issues – standards, certification, data protection, interoperability, lock-in, legal certainty and others – are particularly troublesome for smaller companies. They are the ones who stand to benefit the most from the cloud, but who don't have a lot of spending power, nor resources for individual negotiations with cloud suppliers. Where these barriers exist, I am determined to overcome them.”

As well as data protection regulation, the commission is inviting public authorities and industry, cloud buyers and suppliers to form a European cloud partnership and has made 10 million euros available to get it up and running. The partnership’s first task will be to create 'a strong common basis' for cloud procurement by public authorities, which Kroes believes is crucial to establish standardised services and drive down costs for all users through increased competition.

New players are entering the sector all the time, so you should find a cloud provider that can meet your particular requirements, but you will need to do your research.

Firstly, check that your business ticks the suitability boxes for entering the cloud and what solution is right for you. If you are uncertain, try out a provider who offers a no-obligation free trial. Look at their reputation, reliability and security record and how long they have been operating.

Seek assurances on data protection and the level of service being offered, eg, how quickly will server problems be dealt with and how will you be compensated for disruption in the event of unscheduled system downtime or a security breach. What options are there to upgrade or downgrade your service requirements?

Crucially, talk to established cloud customers and partners – and, in particular, users from your own industry.